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Strategies & Market Trends : Value Investing
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To: Difco who wrote (46416)2/3/2012 11:53:27 PM
From: Difco  Read Replies (2) of 79054
 
To all,

Reading the WSJ today, I was struck by a new financial metric, which is used by private equity and a favorite of Blackstone - economic net income, which includes unrealized gains and employee compensation. For example, Blackstone posted a net accounting loss of $269 million for 2011, but it's economic net income was $1.39 billion. It seems that economic net income has become a popular metric since the New Jersey Division of Investment invested $1.8 billion with the company.

Under FAS 157, private equity investments are mostly level 3, thus it's up to management's discretion to come up with fair value for them and the auditors to sign off as reasonable.

If this metric were to become even more popular, how long would it take for us to hear about economic net loss?
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